Last year was one for the ages for American oil production, as production grew a record 14%.
2013 has been a different story.
In a new note, AllianceBernstein’s Bob Brackett argues US oil production is now at an inflection point: halfway through the year, growth has ground to a halt:
With EIA weekly production data through July 3rd, we are halfway through the year and production is up 282,000 KBOPD (thousand barrels of oil per day), or 564 KBOPD annualized. This number is below previous 800 KBOPD of growth (2012 v 2011) (Exhibit 9) and 1,000 KBOPD of growth (Dec-2012 v Dec-2011).
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And rig count growth, which has also flattened:
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What’s driving the slow down? Some of it is refinery maintenance.
But Brackett has elsewhere suggested productivity and recovery rates may have peaked and production is becoming more expensive.
Brackett concludes that crude prices have not yet responded to this supply freeze — meaning they’ll only continue to go up.
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